Which stock has greater market risk

Assignment Help Finance Basics

Reference no: EM131926027

Qusetion: Consider the two (excess return) index model regression results for A and B:

RA = -1.3% + 1.5RM

R-square = 0.670

Residual standard deviation = 13.6%

RB = 0.7% + 1.2RM

R-square = 0.572

Residual standard deviation = 12.2%

a. Which stock has more firm-specific risk?

b. Which stock has greater market risk?

c. For which stock does market movement has a greater fraction of return variability?

d. If rf were constant at 6.8% and the regression had been run using total rather than excess returns, what would have been the regression intercept for stock A? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal place. Omit the "%" sign in your response.)

Reference no: EM131926027

Questions Cloud

Reflect on your theological foundation : Articulate the significance of identifying first, second, and third order Christian doctrines as you begin to dialogue with opposing theological views.

Find a security case study regarding a hack or data breach : Find a security case study regarding a hack or data breach that shouldn't have happened.

Design to create a patient satisfaction survey : you use best practices of survey design to create a patient satisfaction survey - Using best practices of survey design, create a 15-question patient

Write a function to construct the union of two sets : Write a function to construct the union of two sets. The union of two sets is an unordered listing of elements without repetitions

Which stock has greater market risk : If rf were constant at 6.8% and the regression had been run using total rather than excess returns, what would have been the regression intercept for stock A?

Revolve around the idea of self-recongnization : The concepts of both articles revolve around the idea of self-recongnization in manta rays, each article attempts to convey the cognitive powers of these animal

How would the given customer be classified : Specify the success class as 1 (loan acceptance), and use the default cutoff value of 0.5. How would this customer be classified?

What is the role of individual in helping to solve problem : Are we more likely to solve the problems if we embrace a sense of common purpose and public spirit focused on the collective good?

Trade-offs in different class of agency conflicts and costs : Jensen and Meckling (1976) also provide potentially important insights into the choice of Capital Structure. They discuss Agency Conflicts and the Costs.

User Account

All Pages